Eidesvik Offshore ASA (EIOF) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Eidesvik Offshore ASA's Q1 2026 Presentation. Attending this webcast from us is CFO, Lars Engelsen; and myself, CEO, Helga Cotgrove. We will address any questions submitted during the webcast at the end of the presentation. We kindly ask you to take note of the text on this disclaimer slide. We had freight revenues of NOK 185 million in the quarter. This is down compared to the NOK 199 million for the same period last year. Our EBITDA was NOK 58 million, which is down from NOK 72 million in Q1 2025. The EBITDA margin was 31%. The decrease in revenue and EBITDA is due to the PSV, Viking Queen operating in the spot market that continued its weak performance from Q4 into January and February before we started to see improvement in March and also time before changeover to new contract for Viking Prince. Lars will provide further details on the financials. Consolidated backlog is around NOK 3 billion, a decrease of around NOK 600 million from Q1 '25. which is explained with several vessels coming off contracts. Equity ratio has increased to 59%, up from 58% since year-end '25. Our cash balance is NOK 371 million, up from NOK 340 million at year-end due to timing difference in funding and payment on the project. As mentioned as a subsequent event last quarter, Equinor extended the contract for the supply vessel Viking Avant. The contract extension runs in direct continuation of the current contract, extending the firm period to end May '26 with further options for extensions. The vessel has operated for Equinor for more than 20 years. Aker BP extended the firm period for the supply vessel Viking Prince with approximately 3 months to the end May '26. Subsequent to the quarter, the Board of Directors decided a dividend payment of NOK 0.20 per share to be distributed to the shareholders with reference to the authorization from the shareholder meeting in May 2025. We also commenced our management agreement for the vessel Cecon Vigor in May. Utilization continued to be lower than usual for Eidesvik due to Viking Queen operating in the spot market for the quarter. Viking Princess changing contract and Seven Viking being in for an intermediary inspection and also experiencing an unexpected breakdown on certain key equipment. This is reflected with supply delivering 93% utilization and Subsea Offshore Renewable 94% during the quarter. We had 1 LTI in the quarter and have had one more in Q2. This is very disappointing, and we're exploring how to improve and avoid further incidents. Our contract backlog is around NOK 3 billion. The backlog is lower than what we've seen historically due to several vessels having come off or coming off long-term engagements. We are pursuing opportunities for the available vessels as our goal is long-term utilization. However, based on the recent developments in the spot market, it is currently not unattractive to have some available tonnage. This slide further addresses what I just said with Viking Queen already operating in the spot market, Avant having options from end May and Viking Prince being available by end May. Viking Wind Power is also available from Q2 2027. Geopolitical tensions in the Middle East have continued to escalate during the quarter, culminating in the closure of the Strait of Hormuz. This has driven significant volatility in oil and gas prices with markets reacting rapidly to political developments and communications from the parties involved. The importance of secure and stable energy supply has become increasingly evident in recent months. Continued offshore developments are expected to play a material role in meeting this demand. The North Sea spot market remained weak into Q1 with low utilization and subdued rates. However, supply has gradually tightened as vessel owners relocate tonnage to other regions and repurpose assets. At the same time, demand has begun to recover. With a better supply and demand balance, term and spot rates started to see positive traction, both on the U.K. side and the Norwegian side of the North Sea. This positive trend has continued into Q2 and supported by expected demand growth is anticipated to persist through '27 and '28. Within Subsea and Offshore renewables, contract awards have continued for major subsea players combined with signaled sizable tender pipelines. The sluggishness in contracting vessels, likely driven by the expectation of increased available tonnage with newbuilds scheduled to enter the market is now starting to improve as the need for vessels to cover the backlog is becoming clearer. The renewable market remains strong and continues to absorb competitive subsea tonnage. This supports continued utilization across the subsea fleet, particularly for versatile and energy-efficient vessels. Then over to Lars for the financials.

Thank you, Helga. Please note all numbers are in Norwegian kroner. Revenue in first quarter 2026 was NOK 185 million compared to NOK 199 million in first quarter 2025. Revenue decreased about 7% quarter-on-quarter, mainly due to a weak spot market for supply vessels in the quarter with low utilization and day rates, especially in the 2 first months. Personnel expenses in the quarter were flat compared to the same quarter in 2025. General salary increase was mainly offset by lower sick leave and less costly temporary personnel. We are pleased to see the effect of reduced sick leave on our numbers. Other operating expenses were up 1.7% quarter-on-quarter. EBITDA was NOK 58 million compared to NOK 72 million in the same quarter in 2025. The first quarter in '26 was much like the fourth quarter in 2025, where low utilization and day rates in the spot market affected the results. Joint venture had a loss of NOK 4.7 million compared to a loss of NOK 2 million in Q1 2025. The increased loss is due to the JV vessels and Viking being in for intermediate class renewal in the quarter and in addition, had some technical breakdown. Operating result was NOK 5.6 million in the quarter compared to NOK 23 million in the same quarter in '25. Net financial items improved from NOK 6.8 million to NOK 36 million quarter-on-quarter. Reduced financial expenses for Q1 '26 versus Q1 '25 are mainly due to capitalized borrowing costs on the new builds according to IAS 23. In addition, a positive currency effect, mainly related to loans in U.S. dollar and euro resulted in agio of NOK 33 million in the quarter compared to an agio of NOK 11 million in the same quarter in '25. Profit before taxes in Q1 was NOK 41 million compared to NOK 29 million in the first quarter 2025. If we take a look at our segments on the next slide, we see in our Supply segment, Revenue quarter-on-quarter had a decrease from NOK 108 million in Q1 '25 to NOK 96 million in Q1 '26. This is mainly due to lower utilization on Viking Queen operating in a weak spot market with low utilization. In addition, we had another vessel being between contracts in the beginning of the quarter. As a consequence, EBITDA decreased from NOK 40 million to NOK 25 million in the segment. The EBITDA margin decreased from 37% to 26% and utilization was 93% compared to 100% in Q1 '25. We own 6 vessels in this segment and in addition, have management of 2. For Subsea and Renewables, revenue decreased from NOK 102 million to NOK 98 million quarter-on-quarter. These numbers include our consolidated numbers, plus 50% of revenue from the vessel Seven Viking. EBITDA decreased from NOK 47 million to NOK 42 million. EBITDA margin is 43%, which is a decrease from 46% in Q1 '25. The decreased revenue and EBITDA in this segment quarter-on-quarter are mainly due to the JV vessel Seven Viking, as already mentioned, which led to reduced utilization. Utilization was 94% compared to 100% in Q1 '25. We wholly or partly own 4 vessels in the segment and from early May, have 2 vessels under management. All vessels in this segment are on long contracts. On this slide, we see that our fixed assets are flat from year-end 2025. Cash balance increased mainly due to received funding towards the ammonia project, and I will come closer into this on the next slide. Our equity percentage is 59%, a minor increase from year-end '25. This reflects our solid balance sheet. Net interest-bearing debt by the end of the quarter was NOK 881 million compared to NOK 967 million at year-end last year. The decrease is mainly due to a positive currency effect on loan in foreign currency in addition to an increase in cash balance. Net interest-bearing debt of our adjusted EBITDA in the last 12 months is 2.9. The increase in operating cash flow compared to Q1 '25 is driven by net received funds towards ammonia project of NOK 75 million during the quarter, offset by periodic movement in working capital. The received funds will be spent in the next quarters and hence will affect the operating cash flow negatively these quarters. On the investment side, spending is mainly due to investment in the new builds. Cash flow from finance is mainly due to payment of installments and interest, offset by new debt related to the new builds. Cash balance at the end of the period is about NOK 371 million, where NOK 129 million of this is restricted. And now back to Helga for closing remarks.

Thank you, Lars. As a summary, we are highlighting the following. The quarter was impacted by low utilization for vessels operating in the spot market. We had 100% technical uptime for the PSV fleet. We're seeing improved operating cost parameters and a healthy balance sheet. We have available tonnage in an improving market, and we continue to focus on profitable growth opportunities. However, we noticed that price expectations in the secondhand market is indicating a very, very high rate expectations going forward. Then over to the Q&A.

Thank you, Helga. We have received some questions. The first one is, could you provide some information about Viking reach operations in Q1, Q2?

Yes. So as Viking Reach is on a long-term contract with Reach Subsea. So the vessel has been on hire in the whole period. However, it was -- it went on a contract late or in Q1 and is now also on a contract for a Reach Subsea customer in Q2. You can see that it's operating in the U.K. at the moment.